Dr. Oetker increases worldwide turnover to 3.4 billion euros

With several major acquisitions abroad the Dr. Oetker company further expanded its international market position in the strategic areas of cake/dessert and pizza. Following investments in the expansion of production capacities, Conditorei Coppenrath & Wiese grew primarily through numerous new product launches.

Financial year 2019

"Against the backdrop of a weakening global economy, the 2019 financial year once again proved to be very challenging, both politically and economically. Nevertheless, this year we have above all further expanded our international business with a series of acquisitions, while at the same time successfully advancing our strategic focus on the Cake/Dessert and Pizza Divisions in all countries thanks to organic growth and gratifying gains in market share," explained Dr. Albert Christmann, Chairman of the Dr. Oetker Executive Board, on the occasion of the publication of the annual key figures.

Sales development

Dr. Oetker's companies, which operate on all continents, generated sales revenues of EUR 3.390 billion in 2019, growing by 12.3 percent in the year under review compared with the previous year (EUR 3.019 billion). Adjusted for changes in the consolidated group and exchange rate effects, growth was 4.5 percent.

International markets and acquisitions

In 2019, organic growth was again supplemented by several acquisitions. With effect from January 1, 2019 Dr. Oetker completed the acquisitions of Confetti in Finland and Bagetid in Denmark. Both companies operate an online platform for the distribution of various baking and decorating products from renowned manufacturers to end consumers. Confetti also has its own retail stores and is a franchisor for other businesses. With the acquisition of the Alsa brand business in France, the Netherlands, Belgium and Portugal as of March 1, 2019 and in Morocco as of October 1, 2019, Dr. Oetker has become the market leader in the French baked goods and dessert market. In July 2019 Dr. Oetker acquired the manufacturer Mavalério, which offers cake and dessert decorations for the Brazilian market and the pan-American export market.

Regional Development Dr. Oetker

A regional breakdown shows that sales increased across all regions, although to varying degrees. It is gratifying that Dr. Oetker recorded significant growth on an adjusted basis, especially in Germany and Eastern Europe, and on an adjusted and acquisition-driven basis in America, Asia, Africa and Australia.

In Germany, sales growth was based in particular on the good performance of baked goods, fresh and powdered desserts as well as pizza, frozen cakes, pies and rolls. In contrast, business in muesli, in the professional segment and, due to weather conditions, in preserves fell slightly short of expectations.

The Western Europe region also recorded pleasing growth thanks to good sales in Belgium, the Netherlands and Portugal as well as in France, in particular due to the acquisition of Alsa. In addition, smaller acquisitions in new business models provided additional revenue contributions. Despite adverse conditions in the UK due to the multiple postponement of brexite, Dr. Oetker UK also contributed to revenue growth. In Denmark, on the other hand, declining sales had to be accepted due to differences of opinion in marketing the products.

Sales growth in the Eastern Europe region was driven in part by the development in Poland, both in the cake and dessert category and in the pizza category. In addition, Romania, the Czech Republic and Hungary in particular achieved solid organic growth.

The national companies in Mexico and Brazil also showed encouraging organic growth. Brazil also benefited from the acquisition of the baking decor manufacturer Mavalério. Overall, sales in the Americas region jumped sharply year-on-year, partly due to the full-year inclusion of sales from the Wilton business acquired in the USA in October 2018.

The Asia, Africa and Australasia region benefited in particular from the double-digit percentage organic growth in India, South Africa and Korea. Added to this were the growth effects from the acquisition of Tag El Melouk in Egypt, which was completed in the previous year. By contrast, the distribution of new pizza products in Australia could not yet be expanded as planned. Dr. Oetker in Australia, for example, maintained its sales at the previous year's level.

Innovations Dr. Oetker

One of the main reasons for the division's gratifying development in the past fiscal year is the large number of relevant innovations in all product ranges and in many countries. In the cake and dessert category, for example, Dr. Oetker launched the "Soul Warmer", a creamy cup pudding on the German market that both satisfies consumers' need for convenience and meets the demand for one-person preparations. The "My Sweet Table" cake confectionary also successfully established itself on the market.

In the pizza category, "La Mia Grande" met consumer taste in Germany and was able to gain market share. The raw dough pizza concept "Die Ofenfrische"/ "Casa di Mama" also developed quite well in many countries. The frozen snacks under the sub-brand "Intermezzo" with five new flavours were also successfully launched in Germany. In addition, the company has pushed ahead with the issues of salt reduction, the use of alternative raw materials for pizza bases and compliance with ecological and ethical standards for the raw materials used. In response to current consumer demand, Dr. Oetker has added crunchy muesli without added sugar or other sweeteners and porridge in various flavours to the Vitalis muesli range.

Pastry shop Coppenrath & Meadow

In 2019, Conditorei Coppenrath & Wiese was able to increase sales revenues by 6.1 percent. The increase in sales was primarily driven by the pleasing brand business in Germany, primarily as a result of the development of the core business of cakes and pastries and the strategic segments of sheet cakes and rolls. In the British export business, burdens from the continuing unfavorable exchange rate of the British pound against the euro were partially offset by positive deviations in raw material costs and an active product range policy. To continue the expansion of capacity, the company also invested in additional production lines for rolls and cheesecake as well as in a new production technology in the past fiscal year.

In terms of sales, customer relationships from the e-commerce sector are playing an increasingly important role for the company. In addition to the expansion of business relations in e-commerce, customer relations in traditional sales were also expanded and strengthened.

Investments

At a combined total of EUR 149 million, the investments of all Dr. Oetker companies in 2019 were at the previous year's level (EUR 149 million).

This created the basis for additional growth in the coming years and ensured a state-of-the-art supply chain. In this context, major investments were made in new production lines or warehouse expansions at the production sites in Germany, South Africa and Canada, for example.

In the pizza segment, Dr. Oetker expanded its plant and warehouse capacities, particularly at the international locations in the UK and Canada. In order to be able to serve the growing sales volumes of the Chicago Town brand both in the local market and in export, Dr. Oetker has added a line to its production in the UK. In Canada the company has expanded its raw materials warehouse. In addition, the construction of a new administration and social building, which was begun in 2018, was completed at the Wittlich site. In South Africa, the company is preparing to move into a larger location in 2020 due to capacity constraints. For the cake and dessert areas, work on a new warehouse and a new social building was almost completed at the Romanian plant site.

Conditorei Coppenrath & Wiese devoted the majority of its investments to further expanding production at the Mettingen plant and developing new products.

Employees

The number of employees grew to 16,236 in 2019. There were 7,041 employees in Germany and 9,194 employees at foreign locations. This increase by a total of 1,350 employees resulted in particular from acquisition-related changes at Dr. Oetker. On the one hand, this mainly reflected the full-year inclusion of employees at Wilton in the USA and Tag El Melouk in Egypt. On the other hand, the annual average increased due to acquisitions in 2019, such as Mavalério in Brazil.

Outlook 2020

Dr. Oetker expected growth in 2020 to be at least in line with the strategy before the global crisis measures to contain the corona pandemic took effect. The forecast was based on product innovations, the expansion of distribution in the growth regions of Asia, Africa and Australia, and the integration and further development of the companies acquired in 2019.

With the outbreak of the Covid 19 pandemic in the first quarter of 2020, the outlook for the future has changed. Extensive measures to protect employees were introduced at an early stage both in production worldwide and in the administrative areas, and additional efforts were implemented in procurement to ensure supply capability. In the markets, Dr. Oetker Professional's bulk consumer business has collapsed in all countries since mid-March due to the closure of the catering trade caused by the Corona. Other product ranges, such as the decor business, have also suffered losses. Volume and sales growth in the pizza and food business for domestic consumption at the beginning of the crisis in March and April is at least partly attributable to stockpiling.

"The completely uncertain course of the corona pandemic makes it very difficult at the present time to make a valid forecast for the course of the 2020 financial year," said Dr. Albert Christmann. "The expected considerable economic effects of the corona crisis will also affect us as a food manufacturer. In all companies, we have therefore taken extensive measures at an early stage to compensate as far as possible for sales shortfalls and safeguard them by means of cost measures. Because in times like these, the saying "cash is king" applies, the focus is also on all measures that conserve liquidity in order to be able to seize business opportunities that arise at the same time. We are therefore confident that Dr. Oetker will master both the crisis and the subsequent uncertainty and emerge from it stronger," concluded Dr. Christmann.